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CarMark Dealers: It’s All About Gross

Chris Koury is the pre-owned sales manager at Chapman BMW in Phoenix, Ariz., which is part of a franchised dealer group that has separate locations for its new-model inventory, OEM certified pre-owned units as well as used vehicles from other brands.

Koury wanted a solution that would help his lot boost the bottom line as it turned vehicles that predominantly came through trade. Then an upper-level manager found it: CarMark Certified.

“I’ve got to tell it’s all about one word: Gross,” Koury said. “My GSM came to me and said, ‘I’ve got something to show you,’ and pitched me on the CarMark program. After watching our certified BMW department, their grosses were out of control compared to ours. That’s the first thing that lit me up; I saw dollar signs.”

As dealers nationwide are seeing margins pinched for a variety of reasons, CarMark Certified is designed to be a program to leverage the gross possibility of CPO vehicles without the necessity of automaker certification.

Koury helped to spearhead a significant change to the CarMark program that’s aimed to help both franchised and independent stores. Now vehicles up to 8 years old and 100,000 miles can quality for CarMark certification, which includes a warranty of 12 months or 12,000 miles at a cost that doesn’t erode that gross-profit potential.

“It’s helped us close deals when it comes to Land Rover or Mercedes-Benz,” Koury said. “If you’re looking at putting a warranty on one of those cars, it’s $3,000 or $4,000. The certification for CarMark, the most expensive one I’ve seen is about $580.

“We’ve seen some 2005 or 2006 models with 35,000 miles on them and one-owner cars,” he continued. “Being able to keep those cars with that warranty on them and not exclude them from the pack has made a big difference.”

Koury said about 70 of the 90 vehicles in his inventory are CarMark Certified, a level not previously possible since the majority of those units never would qualify for OEM certification because of age or mileage.

As CarMark Certified is helping Chapman BMW boost its gross on used vehicles, the same thing is happening with an independent dealer on the other side of the country.

Mark Kreider, president of Manheim Imports in Manheim, Pa., explained how “being an independent retailer, we’re up against OEM certified programs all the time.” But since Kreider’s sales team doesn’t have an automaker CPO hook to pitch to potential buyers, it’s been the allure of CarMark Certified that’s given personnel in the showroom and on the lot with an angle Manheim didn’t have previously.

“It’s about confidence. When I see them speak to the customer, they’re speaking with confidence and pride because they know they have something,” Krieder said.

That confidence is coming from potential buyers knowing the value of a certified unit. AutoTrader.com indicated consumers are willing to pay up to $1,380 more for a CPO vehicle.

That willingness to pay more also means those vehicles don’t stay as long on the lot — or on store’s floor plan. CNW Research determined CPO vehicles turn twice as fast as certified units stay in inventory for 27 days versus 55 days for non-CPO units.

“I always felt like we were lacking a national brand, something where the consumer could see the logo and feel right of the bat that this is something they’ve heard of before,” said Krieder who has been involved in the wholesale business for more than 30 years and established his retail dealership in 1998.

“We can keep spending money but it’s all about value. It’s a cliché but it’s true. We made it clear to (dealership sales staff) that this was not an option. This was the program going forward because we were jumping in with both feet,” he continued.

“Frankly, we’re just beginning to scratch the surface. We’re going to start to tailor our inventory to better suit the contracts that make the most sense,” Krieder went on to say, adding that not only is he also certifying luxury models such as BMW but also units from the major Japanese OEMs and some domestic automakers, too.

Both Koury and Krieder prominently display the CarMark brand and logo at their store and online advertisements. The consumer recognition of CarMark and being able to certify models up to 8 years old can open the door to other elements of the program such as vehicle service contracts.

“These dealerships are perfect examples of how the CarMark Certified program can give you a leg up on the competition,” CarMark national sales manager Walt Burns said. “Gross profit is one of our key deliverables — to help you hold more gross and make more money.”